SEBI withdraws defaulter list after dissent

PALAK SHAH Mumbai | Updated on April 23, 2018

BL 24-5-2013 MUMBAI: Prime Minister Manmohan Singh releasing a stamp to commemorate the silver jubilee of SEBI in Mumbai on Friday. Pic by SHASHI ASHIWAL

Many companies object to inclusion of their names, say they have cleared dues

Did SEBI make a faux pas in trying to name and shame defaulters who had not paid their dues or penalty imposed on them by the regulator? At the start of this month, SEBI released an exhaustive list of more than 2,000 entities that had defaulted in penalty payments to the regulator. But the list had to be withdrawn from the website as several companies named in the list raised objections saying they had either cleared their dues or had appealed against the SEBI order to the Securities Appellate Tribunal (SAT).

According to the SEBI list, the total number of defaulters was 2,183, including both individuals and companies, against whom it had passed adjudication orders. Some of the cases date back to 1998, and the penalty amounts ranged between ₹15,000 and ₹10 crore, in case of some large corporate houses.

“Some of the companies raised objections as they had cleared their dues to SEBI,” said a source close to the regulator’s office. “In some cases where NEFT or such wire transfer services were used to make payments by the company, the exact name of the party or purpose of payment is not reflected in the receiver’s account statement.

“This may have confused the regulator as it got the names of companies in the account statement that had paid via cheque or cash but could not find proper details in the account statements of those who had made wire transfer.”

The National Electronic Fund Transfer (NEFT), used by most to transfer money quickly, has, in most cases, put the receiver in a difficult position. That’s because no details are available about the remitter or sender in the account statement. All that the recipient gets to know is either the basic name or in some cases the UTR number, but details such as sender’s PAN number, address and cause/remark for the money transfer are not reflected in the statement. SEBI did not respond to an email query from BusinessLine on the matter.

Non-payment of dues in cases such as Saradha Realty India, Rose Valley Real Estate and Pearl Agrotech Corporation was on account of pending appeals before various courts.

SBI Capital, Axis Capital, GMR Holdings, United Breweries, Alpic Finance (a Cipla group unit), Saradha Realty, United Bank of India and Trident India were among the prominent entities that SEBI had named as defaulters. The charges against these entities include failing to redress investor grievances, and breach of disclosure norms/ collective investment scheme norms/ insider trading norms. In some cases, the regulator has initiated recovery proceedings and has attached assets in order to recover dues.

Published on April 23, 2018

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